Gold thinks we will raise the debt limit and have another round of quantitative easing. Today will be the eighth consecutive day of gains, something it has not achieved since mid-October 2006, when it rose for nine days in a row. It's at a record high.

Yesterday gold surged to a new all-time high of $1588. When Bernanke speculated about further QE, gold surpassed its previous record of $1577. It kept going up as Ron Paul owned Bernanke. It’s in new record territory of the $1590s this morning.

Paul asked Bernanke if gold was money. After a long pause and appearing like a deer in headlights, Bernanke simply said “No.” Paul followed that up by asking if gold is not money, then why central banks hold it in their reserves. Bernanke responded that it was a “long term tradition,” but refused to elaborate.

While Bernanke may want everybody to believe gold isn’t money, it’s not working. With gold prices at new highs and on pace for 11 consecutive years of annual gains, it is clear that the marketplace has sided with over 5,000 years of history that suggest gold is in fact money, rather than with a central banker who believes money can be created with a printing press.

From Rick Santelli: "Ron Paul last week asked Chairman Bernanke during the Humphrey Hawkins-type hearings if he thought gold was money and he (Bernanke) said, 'no.' My answer would have been, it's better than money. Yes, $1,600 gold is insulting central bankers in the following fashion, it's saying gold is going up because what you are doing to the fiat currencies of the world is not tolerable to smart investors."

Over the long term gold remains undervalued or at worst fairly valued. Admittedly, gold has risen by nearly 6.5 times in the last 11 years. However, in the last bull market in the 1970’s, gold rose 24 times from $35/oz to over $850/oz in 9 years. Gold remains well below its 1980 record high of $2,400/oz when adjusted for inflation. The macroeconomic conditions today are even more conducive to gold than they were in the 1970’s.

What happens after August 2?

Goldman is out with a note this morning on the debt ceiling, and unfortunately, even though the firm secretly controls the world, it really doesn't know any more on what's going to happen than anyone else.

This is interesting though. Some dates on August 2 and after. It presumes that the ceiling isn't raised, but that the Treasury prioritizes payments in some way.

• August 2: Treasury exhausts financing options. August 2 is the last day that the Treasury seems likely to be able to make all of its scheduled payments under the current borrowing limit.

• August 3: Social security payments. Roughly $23 billion in Social Security payments are scheduled to be made on August 3, as they are made on the first Wednesday of every month. This, along with other spending that might be delayed, could provide political motivation to reach an agreement on at least a short-term extension.

• August 3: Treasury quarterly refunding announcement. The Treasury is expected to announce its financing plans, as it does each quarter.

• August 9-11: 3-year note, 10-year note, and 30-year bond auctions. These auctions settle the same day as the Treasury coupon payment, on August 15.

• August 15: Treasury coupon payment. Treasury must make around $30 billion in payments to holders of securities. The scheduled payments are expected to exceed revenues that day, but in the very unlikely event that the debt limit hasn't been increased by this point, it is likely that the Treasury would have conserved cash in order to make the payment

The Wisconsin Governor Was Right - expect more of this in other states.

Remember the violent and disgusting demonstrations over Wisconsin Gov. Scott Walker doing away with the collective bargaining for teacher's unions?

The results are in. Some school districts went from a $400,000 deficit to a $1,500,000 surplus as a result.

Why? It seems that the insurance company that provided all the "so-called" benefits to the teachers, was an insurance company owned and operated by the teacher's union. Since they were guaranteed to get the insurance business from the teachers and the State had to pay for it, and not the teachers, they were increasing the annual costs every single year to become the most expensive insurance company in the state. Then the insurance company was donating millions and millions of dollars to their favorite politicians, who when they got elected, guaranteed to keep funding the unions outrageous costs.

Now that the State of Wisconsin is free to put the insurance contract out for bid, and lo and behold, they have saved so much money it has turned deficits into surplus amounts. As a result, none of the teachers had to be laid off, everyone got a raise, etc., etc., and the taxpayers of Wisconsin don't have to pay more taxes to fund the union's political ambitions.

• The problem with bloated central planning is that when austerity hits, the bloat goes away, and millions of government employees suddenly find themselves trying to enter the private sector, realizing they have absolutely no real competitive and marketable skills.

• And while America has yet to even remotely sniff austerity, the unemployment rate is already set to spike, after the USPS just announced it was preparing to close 3,653 out of its 32,000 total post office sites.

• Per UPI: "The U.S. Postal Service is expected to announce a plan to close 3,653 post offices, mostly in small communities, in a cost-cutting measure, officials said. A USPS spokeswoman said the post offices were chosen because they get the "least amount of foot traffic and retail sales," The Wall Street Journal reported Monday."

• So between corporate and now public sector layoffs, expect the unemployment rate to resume climbing steadily to double digits, hitting it sometime in Q4, at which point QE3 will be inevitable.

GOLD NEWS: The debt of the nation looms large this week. I feel we are probably going to see a “short term” solution and raise of the debt ceiling. This will get us through 6 months or so before the vote comes due again. I find it funny that we have to do this at all but we are willing to play politics and see what happens. I wonder if Washington thinks things will be different? Oh wait there is an election around that time so it has nothing to do with the public only politics. The million dollar question is how will this affect the metals? Well I think we could see a short term correction (as crazy as that sounds) followed by continued upward movement in the price (please reference the enclosed chart). However, if I’m wrong and we default the price will skyrocket overnight…… all we can due is stay tuned.

COIN NEWS: The Certified Acceptance Corp. (CAC) is offering to pay the U.S. government $20 million for the 10 highly publicized 1933 Saint-Gaudens double eagles recently found to be government property. Many of you know John is our coin buyer and this would be a huge purchase and we can only hope he is able to get the coins from the government.

Premium quality Type, better dates, and Gold continue to be in strong demand. CAC verified slabs continues to grow in demand and are getting more notice, much more so than the plus graded slabs. Even generic material, such as common date MS65 $20 Saints stickered by CAC are becoming very difficult to acquire. There is at least one very large order out there for these coins that’s not getting filled.

Prices for these very common coins, but somewhat uncommon with CAC stickers, have been edging up as a result of a lack of this material on the market. Some market participants still haven’t caught on that they can receive quite a premium for their wares when participants still haven’t caught on that can receive quite a premium for their wares when they bear the green bean of approval. The rare coin market is in a growth phase at this time, and consequently, it may take a long time before inventories of these coins catch up with demand. Action to take= buy as many high grade $20 pieces as you can get.

If it is true -- as argued in the book Gold Warriors (a must read) that much, maybe most, of the gold in the world is off the books, that is, does not officially exist, then there is a real chance that the financial elite will -- at some point -- dump large amounts of gold onto the market -- to drive the price down.

It would be risky for them to do it --

There would be a lot of angry investors -- and probably new lawsuits -- about where the gold came from. However, a similar thing happened in the 1990s.

If it is true -- as argued in the book Gold Warriors (a must read) that much, maybe most, of the gold in the world is off the books, that is, does not officially exist, then there is a real chance that the financial elite will -- at some point -- dump large amounts of gold onto the market -- to drive the price down.

It would be risky for them to do it --

There would be a lot of angry investors -- and probably new lawsuits -- about where the gold came from. However, a similar thing happened in the 1990s.

It's why I put my $$ into silver -- not gold.

Would love for others to "dump" their gold. Even when soros "dumped" his and the price has gone thru the roof since then. Even if nations decided to "dump" their gold China, india, billionaires would grab it.

I see a much needed correction though. I love to see a big dip personally. Loved it when silver hit 32. Would love to see it hit 20 again but I doubt it will happen.

I see gold is at $1627. That's $373 away from my prediction that everyone called me crazy for saying.

Where are you guys now??

AWLFUL QUIET IN HERE

The recent months have not been kind to the knee jerk world view.

It's crumbling around them and coming down on their heads -- and to maintain their comfort zone they have to shut down, close off, that is, when they are not becoming ever more irrational (eg., W*gs, Epic, etc)

I outlined last week the increasingly bullish consensus among analysts about gold stocks. The same pattern exists with gold itself; growing numbers of analysts have either joined the movement or have upped their bullish outlook.

The following comments and developments have all been reported just this month. It presents quite a convincing case when one strings them together like this. Keep in mind that this is what these analysts and managers are telling their clients.

SICA Wealth Management’s Jeffrey Sica: “Right now, I think gold looks better than ever.” He sees a “painfully high probability” of troubling events occurring in the months ahead. “There has been a general loss of confidence in the ability of central banks and governments to manage the economy. That will continue to give gold and other precious metals a boost.”

Empire Economics chief economist Clifford Bennett expects gold to come close to $2,000 an ounce this year and $2,200 an ounce within 18 months. “There is risk in the second half of the year of a bit of a ‘panic spike,’ if you like, as everyone thinks there isn’t enough to go around and starts to hoard. That’s when you’ll really see gold take off towards $2,000 an ounce.”

Franco-Nevada Chairman Pierre Lassonde said the coming mania in gold will make the 1970s run look like child’s play. “In 1980, the only players, or the dominant players, were the Americans. Today the dominant players are China and India; 58% of all the gold sold this year will be sold in these two countries. When we reach that mania phase… watch out, because it will truly make your head spin.”

Antaike analyst Shi Heqing had this to say about Chinese investors: “Record high prices won’t scare away investors… they are likely to chase the rally and continue to buy gold because paper money feels increasingly worthless and they are worried about inflation.” Shi expects China’s gold demand to rise about 20%, due in no small part to the country’s 6.4% inflation rate.

Reuters: “The case for gold in the longer term is still very strong,” said a Singapore-based trader. “Gold may appeal to new classes of investors who previously avoided the market in favor of more mainstream investments like bank deposits, bonds, and equities. Potentially there’s a whole new market for small-sized gold bars if these investors lose faith in paper.”

Newedge USA predicted gold will hit $1,800 and silver $70 by year-end due to investors seeking a haven asset and physical demand from Asia. “Gold is an excellent hedge in troubled times” said Mike Frawley. “Demand will be very strong long-term from Asia, and the economic trend in the West is improving.”

FX Concepts founder John Taylor: “Gold will climb to $1,900 by October.”

SMC Global: “Evidence of sluggish U.S. growth has shaken investor confidence. Concerns about rising inflation here have also boosted appetite for gold ETFs. Demand is high from small players.”

Minerals and Metals Trading Corp’s Ved Kumar Prakash reported “skyrocketing” demand for gold in India. He predicted that given the company’s brisk sales, gold imports would jump by more than 40% this fiscal year.

The Swiss Parliament is expected later this year to discuss the creation of a gold franc. “I want Swiss people to have the freedom to choose a completely different currency,” said Thomas Jacob, the man behind the gold franc concept. “Today’s monetary system is all backed by debt – all backed by nothing – and I want people to realize this.”

An “Iranian gold rush” is under way, according to an article by Reuters. “Usually as the price of an item increases, demand will decrease – but in the case of gold, it seems that higher prices are creating more demand,” said an unnamed Tehran gold retailer. “The reasons that people are drawn to these safe assets – gold coins and hard currency – are firstly a limited choice of investment opportunities, and secondly a fear from the weakness of the national currency,” said an economist who asked not to be named.

The Utah Legal Tender Act was signed into law by Governor Herbert last month. “Good monetary policy is an important part of a healthy and prosperous economy,” said Senator Mike Lee. He and other Republicans also introduced legislation to eliminate federal capital gains taxes on gold and silver coins. “Since the Federal Reserve Act of 1913, the dollar has lost approximately 98% of its value. This bill is an important step towards a stable and sound currency whose value is protected from the Fed’s printing press.”

CIBC World Markets’ Peter Buchanan remains bullish even if the debt ceiling talks resolve. “Even in the likely event Congress agrees to a debt ceiling rise, recent uncertainties are likely to reinforce central banks’ ongoing efforts to diversify from the dollar into gold and other assets.”

Citigroup Global Markets reported that silver may more than double to $100 an ounce if the current bull market follows similar patterns seen between 1971 and 1980. “If the final rally in the last bull market repeated, then we can expect $100 over the long term… While the high so far this year was at the same level as the peak in January 1980, we are not convinced that the long-term trend is over yet.”

Gold Forecaster analyst Julian Phillips: “This is not typical of a ‘bull’ market that will eventually fall back from whence it came. We believe gold is not in a ‘bull’ market, because it is changing its shape and nature permanently. Our reasoning is not academic posturing, but a reflection of the realities that have taken place over time and those that confront us now. Because it is perceived to be an alternative wealth-preserving asset, a counter to a failing monetary system, it is not a simple commodity moving up and down with the flows and ebbs of economic cycles; it is a valid measure of monetary values.”

American Precious Metals Advisors Managing Director Jeffrey Nichols: “A recent survey of 80 central bank reserve managers predicted that the most significant change in their official reserve holdings in the next 10 years will be their intentional build up in gold reserves. They also predicted that gold will be their best performing asset class over the next year, and sovereign debt defaults will be their principal risk.”

Gloom Boom and Doom editor Marc Faber: “I just calculated that if we take an average gold price of say around $350 in the 1980s and compare that to the average monetary base and the average U.S. government debt in the 1980s...and then if I compare this to the price of gold to today’s government debts and monetary base, gold hasn’t gone up at all. It’s actually gone against these monetary aggregates, and against debt it’s actually gone down. So I could make the case that gold is today probably very inexpensive.”

GoldMoney founder James Turk: “In reality there are very few participants currently in the gold market… when I look at the price action, it suggests to me that a lot of this big money on the sidelines wants to be in. Therefore we are seeing some aggressive bidding on any pullbacks.”

Reuters Money reports that eBay’s “gold and silver outpost” has seen gold bullion sales jump more than 60% from 2007 through 2010. More significantly, “almost half of the silver and gold buyers in the first quarter of 2011 never purchased these items on eBay before.”

Sprott Asset Management chief investment strategist John Embry: “I think it will be really exciting when silver clears $50, because then it will be in absolutely new ground. There is, without question, major physical shortages of physical silver, and demand is robust. Once silver gets rolling, it’s going to levels people cannot imagine.”

It’s hard to go one day without seeing comments like these. The chorus is growing, and as these bullish views spread further and further into the mainstream, the number of investors attracted to precious metals will swell and continue to drive prices higher.

Is this growing consensus the sign of a top? As I said about gold stocks, taking the contrarian view in response to this information would be the wrong move. Fiscal and monetary issues are getting worse, not better, and I think we’re simply seeing more investors recognize the inevitable. We’ll worry about exiting this sector when real interest rates are positive and the dollar is once again a revered currency. Until then, it’s hard to imagine a scenario that isn’t bullish for gold. Any pullback should thus be viewed as a sale price.

Is the impetus for a mania building? I don’t know if we’re on the doorstep of that phase or not, but the fundamental reasons to hold gold are as strong as they’ve ever been. Indeed, it’s getting more critical to have meaningful exposure to precious metals. Keep in mind that when the debt ceiling talks reach a resolution – whatever it may be – the fundamental problems of excessive debt and further deficits will still be unresolved.

Will gold correct if agreements are reached on the debt talks? Probably, but I think the more appropriate question to ask is this: If these analysts are correct, do I own enough ounces?

Jeff Clark – editor of BIG GOLD for Casey Research – puts his money where his mouth is. And his mom’s money, too: Learn how he boosted her IRA by over 90%!

If you mean stock options I think there is likely fraud also stock in companies holding lease options on know gold reserves then I would be careful, very easy to be taken for a ride with them. They abound with hustlers. Holding gold on site is what I have always recommended.

If you mean stock options I think there is likely fraud also stock in companies holding lease options on know gold reserves then I would be careful, very easy to be taken for a ride with them. They abound with hustlers. Holding gold on site is what I have always recommended.